1. Don’t wait – extend early
The shorter the lease, the more expensive it is to extend and the more difficult it is to sell your flat. Leases with 80 years or less to run are subject to a technical calculation that enables the landlord to charge significantly more. So act early on a short lease to avoid this.
2. Make sure you are eligible
You must have been the registered owner of the flat for two years and the lease must be a long lease i.e. over 21 years.
3. Other costs
Once you serve notice under the process, you will be responsible for the landlord’s costs being valuation and legal. You will also have your own legal and valuation costs.
4. Instructing a valuer
A valuer, usually a chartered surveyor, can prepare an initial report as to valuation. The price payable for a lease extension (called the premium) is calculated in accordance with a statutory formula. Negotiations tend to be based on this formula and a valuation will help you negotiate with certainty and knowledge.
Try to negotiate the lease extension as it will be cheaper and quicker to do so. This is of course dependant upon your landlord. However, do not forget the statutory procedure as there are strict time limits to comply with.
6. Buying a flat with a short lease
Make sure the seller (if they qualify) starts the process to extend the lease and serve notice on the freeholder otherwise you will have to wait two years from registration of being the owner. The seller can transfer (by assignment) the benefit of the notice served on the freeholder to you as the buyer to get around the two year ownership requirement. Other issues such as the premium payable by you post completion will be a matter of negotiation between buyer and seller as to the sale price.
7. Take advice
Always used qualified experienced professionals as the advantages of an extension of a lease is that the property is more valuable and saleable. The process can be long, but it is worthwhile in most cases.